IBM’s Hungary unit cuts staff by 500

BUDAPEST: The largest Hungarian unit of US computer maker International

Business Machines Corp. has cut staff numbers by 500 down to 5,500, local

business daily Napi Gazdasag said on Friday. Quoting sources at the unit,

IBM Storage Products Kft, the paper said the cut was because of a fall in

orders.

Communications director of IBM Storage that is one of Hungary's largest

companies and exporters by sales said the company would not comment to foreign

press. "Our policy is that we cannot comment to non-Hungarian media,"

Balazs Horvath told Reuters.

The company, headquartered in Szekesfehervar city in western Hungary, has

begun a development program worth several million dollars despite the staff cuts

and hopes to increase its workforce again in the second half of the year, Napi

said. The paper quoted company sources as saying that fluctuations in the order

book could cause similar ups and downs in staff numbers in the future.

The paper said a large number of the workers laid off were ethnic Hungarians

from neighboring Slovakia employed since last year. Western Hungary is

struggling with a shortage of labor after multinationals began making sizeable

investments in the last decade. Staff cuts at the new sites have been rare.

The government encourages new investors to settle in the eastern part of the

country where unemployment is higher and living standards are low.

IBM wins $100 m contract



Meanwhile, in London, IBM announced that it had won a five-year software
deal worth around $100 million with oil giant Royal Dutch/Shell, on Friday. The

deal will see IBM supply software to Shell's new "MegaCentre"

information technology offices.

Shell's first MegaCentre hubs will be in Kuala Lumpur, The Hague and Houston.

A Shell spokesman said the deal would see the company set up one standard

software system throughout its MegaCentre hubs, helping to cut costs in those

areas.

(C) Reuters Limited 2001.